Property
Despite the previous negative press about the property market, a recent survey found that a third of adults believe now is a good time to invest in bricks and mortar and half the population believe property is a good long term bet. This is most likely due to the fact that reported increases in property sale numbers, price increases and recent new buyer inquiries have now increased for nine consecutive months.
Research and historical records show that the UK housing market follows a similar pattern of growth after each property price crash or economic recession, making it easier to predict growth rates on an ongoing basis. Leading property professionals Savills are predicting property market growth of approximately 10% across the UK within the next three years, followed by a further spike taking the total growth from today’s prices to over 30% in just five years (from Savills Residential Property Focus Research May 2009).
Investment opportunities in property funds/companies are generally 'closed', i.e. you are not able to make regular contributions to the fund, but must purchase shares initially. Some advisors consider this type of indirect saving to be relatively low-risk because the investment portfolio is carefully monitored and managed by investment professionals. There is inevitably risk involved in any investment, if the property market suffers a sudden decline, the price of the shares and the value of any dividends paid will also decrease. However this can be rectified by purchasing property under the market value and seek to mitigate risk when the properties are purchased after a ‘crash’.
A result of the ‘credit crunch’ is that direct investment in property typically requires substantial deposits in order to obtain the mortgage finance, thus creating a barrier for many into such investments. Property funds and property investment companies, however allow investors to benefit from a more diverse portfolio of properties than would otherwise be possible, all without the hassle of property management.
